Crude oil prices fell by more than $1/bbl on the London market during Apr. 28 trading in a lukewarm response to additional international sanctions against Russian officials and companies regarding its conflict with Ukraine. Analysts noted the sanctions were less severe than expected.
Additional US sanctions involve seven individuals and 17 companies believed to be closely associated with Russian President Vladimir Putin. The European Union announced new sanctions on 15 Russian and Ukrainian individuals.
US President Barack Obama acknowledged the sanctions might not work. His comment came during a news conference in the Phillippines. Market observers suggest the sanctions are unlikely to trigger disruptions in world oil supply from Russia.
Stephen Schork, who analyzes energy markets for the Schork Report, said, “The sanctions are going to be pretty weak because we really don’t have any tools in our shed to address (the instability), and the likelihood of disruptions is pretty low.”
Meanwhile, US natural gas prices are climbing. Analysts attribute the rally to below-normal storage levels, which are at about half the normal level for late April. Inventories fell on a cold winter and high heating demand even though US gas production levels are robust.
The Energy Information Administration estimated underground gas storage in the Lower 48 as of Apr. 18 at 899 bcf, about 1 tcf below the average for this time of year (OGJ Online, Apr. 24, 2014).
Analysts calculate that gas storage levels need to increase by at least 2.6 tcf before Nov. 1 to meet typical winter demand, the Wall Street Journal reported.
The May natural gas contract was up 14.8¢ to a rounded $4.80/MMbtu, which was the commodity’s highest close for the front-month contract since Feb. 26.
Heating oil for May delivery decreased 3.47¢ to a rounded $2.95/gal. Reformulated gasoline stock for oxygenate blending for May delivery decreased 3.48¢ to a rounded $3.04/gal.
In London, the June ICE contract for Brent crude delivery dropped $1.46, closing at $108.12/bbl. The July contract fell $1.49 to close at $107.64/bbl. The ICE gas oil contract for May declined $5.75 to $914/tonne.
The Organization of Petroleum Exporting Countries said for its basket of 12 benchmark crudes was $105.43/bbl on Apr. 28, up 6¢.
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